Welfare repayment crunch boosts savings demand

People forced to repay overpaid welfare benefits will be worse off after the government raised the repayment rate.

The repayment level of 14 per cent on fornightly welfare payments will rise to 15 per cent, which could take effect from this week, the Daily Telegraph reports.

About two million Aussies are overpaid benefits and are forced to repay a portion each year. Maree O’Halloran, director at the lobby group Welfare Rights, told the news provider that tens of thousands of young people receiving the Youth Allowance will have just $12.30 per day to live on once the repayment level is increased.

A Newstart Allowance recipient could lose up to $68.40 a fortnight to debt recovery, the report added, while pensioners face losing up to $92.38 per fortnight.

The squeeze on welfare repayments will boost the demand for high interest savings accounts. The latest Bankwest/Mortgage and Finance Association of Australia (MFAA) found that difficult personal finances are forcing first-time home buyers to look for cheaper and smaller houses in their attempt to break into the property market.

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